Payday Lending Heat Wave Hits San Francisco BayDespite the fact that the
payday loan industry in
California is booming, and that the state legislature is simultaneously $15 billion dollars over the budget and considering raising the maximum loan limit for short term credit loans from $300 to $500, several small, local governments in the San Francisco Bay area are considering options for curbing the expansion of payday loans.
In San Francisco itself payday lenders are not allowed to operate within a quarter mile radius of another cash advance store. In nearby Pacifica City, lawmakers recently chose to bar any new fast cash businesses from opening within city limits, and San Jose and Dale City are considering doing the same.
Recently, the cities of Palo Alto and Santa Clara have been experiencing a rise in local activism calling for further payday loan regulation.
San Mateo County, the county south of San Francisco, has become a hotbed for lenders, housing 37 short-term credit stores. The County Board of Supervisors has decided to allocate resources for researching options to help control the proliferation of these types of businesses through education and/or zoning legislation.
The county has even begun offering their own small-amount loans to their constituents through the
San Mateo County Credit Union. These loans have a loan life of 18 months and carry what they believe is a reasonable interest rate.
The State of California, however, already has payday loan laws on the books, and is known as perhaps the most aggressive state in promoting consumer financial protection policies.
California law caps the interest rates on deferred deposit loans at 15%, and prohibits loans to be rolled over into another pay period. Loans can have a maximum lifespan of 31 days.
Considering California’s history of progressively pursuing issues of consumer financial protection, expect to see more local governments taking actions to regulate the business of car title loan lenders, pawn shops, and the like.